Fitch Rates W.R. Berkley's $350MM Senior Notes 'BBB+'

CHICAGO--()--Fitch Ratings has assigned a 'BBB+' rating to W.R. Berkley Corporation's (Berkley) $350 million senior unsecured debt issuance due 2044. The rating is equivalent to Fitch's ratings on Berkley's existing senior unsecured notes.

On July 17, 2014, Fitch affirmed all of its ratings for Berkley with a Stable Outlook. A complete list of ratings follows at the end of this release.

KEY RATING DRIVERS

Fitch expects the company to use the debt issuance proceeds for general corporate purposes, including refinancing $200 million of 5.6% senior unsecured debt that matures in May 15, 2015.

Fitch views the debt issuance favorably overall as the new debt was issued at a more attractive rate with a long-dated maturity, resulting in an improved liquidity profile and eliminates near term refinancing risk. Fitch expects that the modest increase to pro forma financial leverage will be manageable and within both Fitch's expectations for the company and Fitch's sector credit factor guidelines for the rating category.

Berkley's pro forma debt-to-total capital ratio of 36% at June 30, 2014 will temporarily be above peer averages following the transaction; however, after the anticipated $200 million debt refinancing in early 2015, the ratio will reduce to 34% which conservatively assumes no growth in equity and no other debt repayment.

Fitch expects run-rate leverage to stay near current levels with earnings-based interest coverage remaining at approximately 6x.

RATING SENSITIVITIES

Key rating triggers that could lead to a positive rating action include: 1) a sustained reduction in financial leverage to low-mid 20%'s; 2) continued profitable operating performance including a sustained combined ratio in the mid-90%'s and maintenance of aggregate loss reserve adequacy; and 3) maintenance of Fitch's Prism capital model score of 'Very Strong'.

Key rating triggers that could lead to a negative rating action include: 1) net leverage above 5.0x; 2) a material reduction in capitalization due to higher than expected losses in its investment portfolio, material adverse reserve development, or poor underwriting results; or 3) a sustained deterioration of operating performance on an absolute basis or relative to peers.

Additionally, a material increase in run rate debt to total capital ratio, or financial leverage ratio (debt to total capital excluding FAS 115), to 35% could lead Fitch to expand the notching between Berkley's IDR and debt rating, resulting in a one-notch downgrade to the senior and subordinated debt ratings.

Fitch has assigned the following rating:

W.R. Berkley Corporation

--$350 million 4.75% senior debt due 2044 'BBB+'.

Fitch currently rates Berkley as follows:

W. R. Berkley Corporation

--IDR 'A-';

--$200 million 5.6% senior debt due 2015 'BBB+';

--$150 million 6.15% senior debt due 2019 'BBB+';

--$300 million 7.375% senior debt due 2019 'BBB+';

--$300 million 5.375% senior debt due 2020 'BBB+';

--$76 million 8.7% senior debt due 2022 'BBB+';

--$350 million 4.625% senior debt due 2022 'BBB+';

--$250 million 6.25% senior debt due 2037 'BBB+';

--$350 million 5.625% junior subordinated debentures due 2053 'BBB-'.

Acadia Insurance Company

Admiral Insurance Company

Berkley National Insurance Co.

Berkley Regional Insurance Company

Berkley Regional Specialty Insurance Co.

Carolina Casualty Insurance Co.

Continental Western Insurance Co.

Firemen's Ins. Co. of Washington DC

Nautilus Insurance Company

Tri State Insurance Co. of Minnesota

Union Insurance Company

Union Standard Lloyds

--IFS 'A+'.

Berkley Insurance Company

--IFS 'A'.

The Rating Outlook is Stable.

Additional information is available 'www.fitchratings.com'.

THE ISSUER DID NOT PARTICIPATE IN THE RATING PROCESS, OR PROVIDE ADDITIONAL INFORMATION, BEYOND THE ISSUER'S AVAILABLE PUBLIC DISCLOSURE.

Applicable Criteria & Related Research:

--'Insurance Rating Methodology' (Nov. 13, 2013);

--'Property/Casualty Insurance (U.S.) - Sector Credit Factors' (Aug. 3, 2012).

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723072

Property/Casualty Insurance (U.S.) -- Sector Credit Factors

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=683831

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=844635

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Gretchen Roetzer
Director
+1-312-606-2327
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Douglas Pawlowski, CFA
Senior Director
+1-312-368-2054
or
Committee Chairperson
R. Andrew Davidson, CFA
Senior Director
+1-312-368-3144
or
Media Relations
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Gretchen Roetzer
Director
+1-312-606-2327
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Douglas Pawlowski, CFA
Senior Director
+1-312-368-2054
or
Committee Chairperson
R. Andrew Davidson, CFA
Senior Director
+1-312-368-3144
or
Media Relations
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com